How to make effective decisions
As an accountant and business partner, making decisions is an important part of your job. But good decision making needs practice. By Duncan Brodie FCMA, director of Goals and Achievements.
Delaying decisions can have many negative consequences. For example, imagine that you failed to take a decision about a projected cash shortfall. You would not be taking any action such as arranging an overdraft, extending supplier payment terms or focusing on collecting monies owed to your organisation. You would get an unwelcome outcome - running out of cash is not likely to build your reputation.
Barriers to effective decision making
There are many reasons why people resist taking decisions. These include:
There are many reasons why people resist taking decisions. These include:
1. Procrastination - delaying or putting off something so that a small decision ends up becoming a major one.
2. Information overload - you have so much information that you don't know where to begin.
3. Waiting for perfect information - accountants tend to be naturally prudent - but if you're waiting for perfect information, you may never get to a decision taking stage because it isn't available.
4. Fear - putting it off for fear of making the wrong decision and looking to others.
Making effective decisions
Given that there is no guaranteed formula for success, what can you do to make your decision making more effective?
Given that there is no guaranteed formula for success, what can you do to make your decision making more effective?
Be clear about the purpose of your decision
Our natural tendency is to jump straight into problem solving mode, but spending a few minutes clarifying the purpose of the decision could be time well spent. It might be to kick start change, to resolve a problem or to move into a new market.
Our natural tendency is to jump straight into problem solving mode, but spending a few minutes clarifying the purpose of the decision could be time well spent. It might be to kick start change, to resolve a problem or to move into a new market.
Generate alternatives
When faced with a significant decision it can sometimes feel like a win-lose or right-wrong situation, especially if you have only two choices. By generating alternatives, you potentially generate an even better decision.
When faced with a significant decision it can sometimes feel like a win-lose or right-wrong situation, especially if you have only two choices. By generating alternatives, you potentially generate an even better decision.
Test your ideas with others
See if you can find someone outside the department to bounce ideas off. Those from other professional disciplines often look at things differently and may raise your own level of understanding about the decision and consequences.
See if you can find someone outside the department to bounce ideas off. Those from other professional disciplines often look at things differently and may raise your own level of understanding about the decision and consequences.
Trust your intuition
Sometimes the facts, figures and information might be pointing your decision in a certain direction, but intuitively it doesn't feel right. Learning to trust your intuition (or gut feeling) is valuable as it opens up possibilities that you might not otherwise consider.
Sometimes the facts, figures and information might be pointing your decision in a certain direction, but intuitively it doesn't feel right. Learning to trust your intuition (or gut feeling) is valuable as it opens up possibilities that you might not otherwise consider.
Keep a sense of perspective
Remember that few decisions have life or death consequences, so keep a sense of perspective when it comes to making them.
Remember that few decisions have life or death consequences, so keep a sense of perspective when it comes to making them.
by By Duncan Brodie FCMA, director of Goals and Achievements.
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